This research will analyze the joint determination of hospital employees' wages and labor union organization. Data is obtained from a survey of 1200 U.S. hospitals, matched to the 1976 American Hospital Association Annual Survey and county labor market variables. We will use a simultaneous probit statistical model to analyze the data. Wage equations will be estimated for RN's, secretaries, and housekeeping empolyees. We hypothesize that wages depend on market conditions and collective bargaining. The presence of a collective bargaining agreement also depends, in part, on the union wage differential. We will estimate equations from which the probability of collective barganing by hospitals can be predicted for the four occupations listed above. The model will also be estimated with individual data from the 1976 Current Population Survey. We will also analyze the effect of labor unions on wage inequality among hospital empolyees. Labor unions reduce wage differential between organized employees, but they create a gap between organized and unorganized groups. We will develop techniques, based on the results of our probit analysis, to quantify these effects. Thus, we will answer the question: Do labor unions reduce the inequality of hospital employees' wages?